Pension Briefing Session Canterbury Christ Church University

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Pension Briefing Session -Canterbury Christ
Church University

• The Local Government Pension Scheme
  (Amendment)(No 3) Regulations 2005 - draft
  version

2
Remember

• These are only proposals at this stage.
• All employers have the right to comment on the
  proposals.
• Comments must be received by 28 February

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From 6 April 2006

• Retirees from 6 April 2006 can increase their
  lump sum retiring allowance (LSRA) by commuting
  their pension - 12 LSRA for every 1 of pension
  given up, but the total LSRA cannot exceed 25 of
  the capital value of their accrued rights ( as
  determined by the Government Actuarys
  Department). Spouses pensions are not affected.
• Date of joining extended to age 75

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From 6 April 2006

• All scheme members can count scheme membership
  beyond age 65
• 15 limit on contributions lifted
• Optional contributions for strike periods -
  contributions raised from 16 to value of member
  and relevant employer contributions
• Total value of benefits not to exceed the limits
  set out in the Finance Act 2004 (i.e. the
  lifetime allowance)

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From 6 April 2006

• No limit to the pay used for the calculation of
  benefits
• The ability for a retiring member to surrender
  part of their pension to provide a higher
  spouses pension withdrawn
• Flexible retirement
• - Members 60 or over who elect, with employers
  consent, to reduce hours or grade can receive
  benefits even though still working.
• - Any reduction to benefits can be waived in
  whole or part by the employer - at a cost
• Option for scheme member to give up LSRA for
  additional pension withdrawn

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From 6 April 2006

• Definition of eligible child changed
• - From 5 April 2006 childs pension payable to
  over 17 in continuous FT education or training
  will cease at age 23
• Scheme member buying added years restricted to 6
  2/3. Where scheme member over 45 when joined the
  scheme, benefits from added years now calculated
  as 1/80 pension and 3/80 LSRA instead of 1/60
  pension and no lump sum. Contract to continue to
  age 65

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From 1 October 2006

• NRD age 65
• 85 years rule goes (but with some transitional
  protection)
• Nomination of early retirement date
• -Where 60 on or after 1 April 2013 can
  nominate a date between 60 and 65 as nominated
  retirement date
• - Scheme member can pay additional
  contributions to offset reduction to benefits.
• Working beyond the nominated date or age 65 will
  result in an increase to the benefits

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Transitional protection

• Where a scheme member retires earlier than age 65
  and meets the 85 year rule at that time, service
  prior to 30 September 2006 ( 1 April 2013 where
  60 or over by 31 March 2013) will not be reduced

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2008 Scheme - New look LGPS

• Green paper - Facing the future Principles and
  propositions for an affordable and sustainable
  local government pension scheme
• Timetable
• Policy discussion paper - June 2006
• Draft regulations -Autumn 2006
• Final regulations - April 2007
• New scheme - April 2008.

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2008 Scheme - New look LGPS

• Scheme retirement age of 65.
• Benefits paid early (except on ill-health
  grounds) would be actuarially reduced.
• Benefits paid later would be actuarially
  increased.
• Accrual rate of 1/60
• No automatic lump sum - but could choose to
  commute pension at a rate of 121
• Pensionable pay limited to basic salary. All
  other payments, such as bonuses, fees, overtime
  and allowances, excluded.

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2008 Scheme - New look LGPS

• Tiered iIl-health retirement benefits with
  improved enhancement for members whose employment
  is terminated on grounds of being permanently
  incapable of performing any gainful employment by
  reason of ill-health.
• A second tier of un-enhanced ill-health
  retirement benefits could be available to those
  who are incapable of continuing in their role,
  but who are capable of undertaking other
  employment.

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2008 Scheme - New look LGPS

• Survivor benefits extended to unmarried partners
• Death in service benefits could be increased to
  three times pensionable pay.
• Employee contributions could be varied, dependent
  on pay levels. Average employee contributions
  would be 7

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Transitional Arrangements

• All members on the date the Scheme commences
  automatically transferred to the new arrangement.
• They would be awarded a period of membership in
  the new scheme which is of equal value.
• Deferred and pension members, at the date the new
  scheme commences, would be entitled to retain
  benefits under the Local Government Pension
  Scheme regulations in place at their date of
  leaving.

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Remember

• These are only proposals at this stage
• They will not become law until they are agreed by
  Parliament